London property look increasingly good for dollar based buyers.
10th October 2019
Despite a backdrop of intensifying political and economic uncertainty, the prime central London residential market had bottomed out, with prices down just 0.3% in the three months to the end of September.That was the smallest quarterly adjustment for the past four years but continued uncertainty is holding back a bounce in the market, according to the latest analysis from real estate adviser Savills. The extent of price falls is now converging across all price bands, size or type of property, which suggests that pricing fully reflects current market conditions and risks, the report says.Across London prices at the top end fell by 3% year on year, meaning average prices are now 13.6% below their pre 2016 referendum level, and a total of 20.4% below the market peak just over five years ago. For a US dollar buyer this equates to an effective price adjustment of around 42%, making London property look increasingly good value for international buyers.
This broad price correction across prime central London is comparable with falls seen post financial crisis and in the downturns of the early 1980s and early 1990s, suggesting the market is now close to a full re-pricing,’ said Lucian Cook, Savills head of residential research.Uncertainty remains far the biggest factor in the market holding back demand, Savills says. Some 68% of the firm’s London agents name Brexit as the biggest constraint on the market, with 23% citing a lack of stock as sellers hold back. The spectre of an election is cited by 94% of agents as a concern to buyers and sellers alike.‘We expect buyer and seller caution to prevail through the remainder of the year as negotiations with the European Union continue. The prospect of a general election only adds to this, though we don’t envisage further significant price falls over this period, given the extent to which values have already adjusted and the size of swing in voting intentions required for there to be a hard left majority government and associated shift in policy environment,’ Cook explained.‘There’s a growing pool of domestic and international money waiting to exploit a perceived buying opportunity, subject to getting more clarity on what lies ahead politically and economically. Deal or no deal Brexit, a bottoming out in the value of sterling should act as the trigger to unlock pent up demand,’ he pointed out.The more domestic outer prime London markets have not escaped the effects of Brexit angst, albeit values fell just 0.9% over the past year to leave them down some 9.8% since the referendum.